[DigitalToday reporter Jinju Hong (홍진주)] Chinese electric vehicle companies are changing the global auto industry by securing profitability beyond simple price competitiveness. While western companies fail to escape losses despite massive investment, Chinese makers have already built profit-making structures and are seen as having entered a new stage.

InsideEVs, an electric vehicle outlet, reported on March 28 that major Chinese EV makers such as Leapmotor, Nio and Xpeng have succeeded one after another in turning profitable. Leapmotor posted annual net profit of $78 million for 2025, rebounding from a loss of more than $400 million a year earlier. Nio recorded adjusted net profit of about $100 million in the fourth quarter of 2025, showing an improved earnings structure. Xpeng also posted net profit of $55 million in the same period, escaping a loss of about $190 million a year earlier.

The companies are grouped with BYD, Xiaomi and Li Auto as a set that has achieved both growth and profit at the same time. In particular, China’s domestic EV market delivers profits despite extreme price competition, showing the industry has already entered a mature stage.

Western automakers, by contrast, are still suffering from the cost burden of shifting to EVs. Tesla is the only one generating stable profits, but recently has shown a trend of slowing profitability as it expands investment in artificial intelligence and robotics businesses. General Motors, Ford and Stellantis have recorded losses of several billion dollars in their EV businesses, and Europe’s BMW, Volkswagen and Mercedes-Benz are focusing on technology improvements, but securing profitability remains a task.

The competitiveness of Chinese companies does not rest only on subsidies. The key is "vertical integration". BYD produces more than 75 percent of key components in-house, including batteries, electric motors, power electronics and software, sharply lowering costs. China’s effective control of the battery supply chain also underpins cost competitiveness. Batteries are a key factor that accounts for a significant share of EV costs.

Business model innovation is also an important differentiator. Nio sells batteries separately from vehicles and instead offers a swappable battery service. It lowered upfront vehicle purchase costs and, over the long term, built a subscription-type revenue structure. Nio currently operates more than 3,700 battery swap stations across China and, in February, set a new record by completing 177,627 battery swaps in a single day.

Nio was pushed to the brink of bankruptcy during the COVID-19 pandemic but recovered after raising $1 billion from Chinese state-owned companies. It then continued to grow after securing an additional $2.2 billion from Abu Dhabi’s sovereign wealth fund in 2023. Leapmotor entered the European market through a partnership with Stellantis and sold 596,555 vehicles worldwide in 2025, up 103 percent from a year earlier. It currently sells vehicles in 40 countries across Asia, Europe, the Middle East, Africa and South America.

New players are also growing quickly. Xiaomi, despite having no experience in the auto industry, sold more than 380,000 vehicles and turned profitable in less than 2 years after launching its first electric car. Its strategy of expanding cars into a "digital platform" based on its smartphone and IoT ecosystem is seen as having been effective.

In contrast, the pace of EV demand growth itself is slowing in western markets. A mix of high prices, charging infrastructure issues and reduced subsidies is holding adoption below expectations. Meanwhile, Chinese makers are rapidly expanding into overseas markets and widening their sales networks across regions including Asia, Europe, the Middle East and South America.

The industry is producing analysis that the center of the EV industry is structurally shifting. In the past, technology competition was the key. Now the standard determining the outcome is shifting to who can sell cheaper, in greater volume, and still make money.